Post on 05-Jul-2020
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MAY 10, 2012 Consolidated Financial Results of the year ended March 31, 2012 (Japanese Standards)
Company name: NIKON CORPORATION Code number: 7731; Stock listings: Tokyo Stock Exchange URL http://www.nikon.co.jp/ Representative: Makoto Kimura, Representative Director and President Contact: Masayuki Hatori, General Manager, Corporate Communications & IR Department TEL: +81-3-3216-1032 Date for the annual shareholders’ meeting: June 28, 2012 Date for the filing of the consolidated financial statements: June 28, 2012 Date of year-end dividend payout: June 29, 2012 Preparation of supplementary materials for financial results: Yes Information meeting for financial results to be held: Yes (for institutional investors and analysts)
Note: Amounts less than 1 million yen are omitted.
1. Consolidated Results of the year ended March 31, 2012 (From April 1, 2011 to March 31, 2012) (1) Financial Results (Percentage represents comparison change to the corresponding previous period)
Net Sales Operating Income Ordinary Income Net Income Million yen % Million yen % Million yen % Million yen %
Year ended March 31, 2012 918,651 3.5 80,080 48.2 89,383 60.2 59,305 117.1 Year ended March 31, 2011 887,512 13.0 54,052 - 55,811 - 27,312 -
(Note) Comprehensive Income: Year ended March, 2012; 55,748 million yen ( 174.3%) Year ended March, 2011; 20,323 million yen ( -%)
Net Income per Share of Common
Stock
Net Income per Share of Common
Stock after Dilution
Ratio of Net Income to
Shareholders’ Equity
Ratio of Ordinary Income
to Total Assets
Ratio of Operating Income
to Net Sales Yen Yen % % %
Year ended March 31, 2012 149.57 149.41 14.4 10.6 8.7 Year ended March 31, 2011 68.90 68.83 7.2 7.1 6.1
(Reference) Equity in Earning of non-consolidated subsidiaries and affiliates: Year ended March, 2012; 1,535 million yen Year ended March, 2011; 1,231 million yen
(2) Financial Position
Total Assets Net Assets Equity Ratio Net Assets per Share of
Common Stock Million yen Million yen % Yen
Year ended March 31, 2012 860,230 433,616 50.3 1,091.98Year ended March 31, 2011 829,909 389,220 46.8 980.62
(Reference) Equity: Year ended March 31, 2012: 433,011 million yen Year ended March 31, 2011: 388,793 million yen
(3) Cash Flows Cash Flows from
Operating Activities Cash Flows from
Investing ActivitiesCash Flows from
Financing Activities Cash and Cash Equivalents
at end of year Million yen Million yen Million yen Million yen
Year ended March 31, 2012 15,073 (49,144) (15,150) 131,711Year ended March 31, 2011 123,613 (23,589) (20,122) 181,061
2. Dividends Dividend per share
First Quarter ended
Second Quarter ended
Third Quarter ended
Year-end Annual
Yen Yen Yen Yen Yen
Year ended March 31, 2011 - 5.00 - 14.00 19.00
Year ended March 31, 2012 - 17.00 - 21.00 38.00
Year ending March 31, 2013 (Forecast)
19.00 22.00 41.00
Total Annual Cash Dividend Paid
Dividend Payout Ratio (Consolidated)
Dividend Payout to Net Assets Ratio (Consolidated)
Million yen % %
Year ended March 31, 2011 7,532 27.6 2.0
Year ended March 31, 2012 15,067 25.4 3.7
Year ending March 31, 2013 (Forecast)
25.0
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3. Consolidated Financial Forecasts for the year ending March 31, 2013 (From April 1, 2012 to March 31, 2013) (Percentage represents comparison to previous fiscal year)
Net Sales Operating Income Ordinary Income Net Income Net Income per
Share of Common Stock
Million yen % Million yen % Million yen % Million yen % Yen Second quarter ending
September 30, 2012 485,000 (0.3) 35,000 (42.8) 38,000 (41.7) 29,000 (42.5) 73.14
Full year 1,030,000 12.1 90,000 12.4 94,000 5.2 65,000 9.6 163.93
4. Other (1) Changes of significant subsidiaries during the current fiscal year (change of specified subsidiaries that affected the
scope of consolidated reporting): None (2) Changes of accounting policies applied, procedures and methods of presentation for preparing consolidated financial
statements 1. Changes in accounting policies resulting from the revision of the accounting standards and other regulations: None 2. Other changes in accounting policies: None 3. Changes in accounting estimates: None 4. Restatement of corrections: None
(3) Number of shares issued (common stock)
1. Number of shares issued as of the term end (including treasury stocks): Year ended March 31, 2012 400,878,921 shares Year ended March 31, 2011 400,878,921 shares
2. Number of treasury stock as of the term end: Year ended March 31, 2012 4,342,128 shares Year ended March 31, 2011 4,401,391 shares
3. Average number of shares during the term: Year ended March 31, 2012 396,502,223 shares Year ended March 31, 2011 396,434,820 shares
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〔Reference〕 1. Non-consolidated Results of the year ended March 31, 2012(From April 1, 2011 to March 31, 2012) (1) Financial Results (Percentage represents comparison change to the corresponding previous period)
Net Sales Operating Income Ordinary Income Net Income Million yen % Million yen % Million yen % Million yen %
Year ended March 31, 2012 688,781 1.6 33,712 119.1 48,575 92.0 29,318 127.6 Year ended March 31, 2011 677,661 18.3 15,390 - 25,303 - 12,879 -
Net Income per
Share of Common Stock
Net Income per Share of Common
Stock after Dilution Yen Yen
Year ended March 31, 2012 73.94 73.86 Year ended March 31, 2011 32.49 32.46
(2) Financial Position
Total Assets Net Assets Equity Ratio Net Assets per Share of
Common Stock Million yen Million yen % Yen
Year ended March 31, 2012 662,603 305,995 46.1 770.14Year ended March 31, 2011 655,760 291,018 44.3 732.93
(Reference) Equity: Year ended March 31, 2012: 305,390 million yen Year ended March 31, 2011: 290,591 million yen
(※Indication of quarterly review procedures implementation status)
This financial results report is exempt from review procedures under Japan’s Financial Instruments and Exchange Law. It is under the review procedure process at the time of disclosure of this report.
(※Appropriate use of business forecasts; other special items) Performance forecasts and other forward-looking statements contained in this report are based on information currently available and on certain assumptions deemed rational at the time of this report’s release. Due to various circumstances, however, actual results may differ significantly from such statements. For more information about the Company’s business forecasts, please refer to page 6.
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Contents 1. Operating Results ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 5
(1) Analysis of operating results ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 5 (2) Analysis of financial position ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 7 (3) Shareholder returns policy and dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 7 (4) Business and Other Risks・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
2. Status of Nikon Group ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 11 3. Management Policies ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 12
(1) Company’s Basic Management Policies ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 12 (2) Targeted management indices ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 12 (3) Medium and long-term management strategies and issues to be addressed ・・・・・・・・・・・・・ 12
4.Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 13 (1) Consolidated Balance Sheets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 13 (2) Consolidated Statements of Income and Statements of Comprehensive Income ・・・・・・・・・ 15 (3) Consolidated Statements of Changes in Net Assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 17 (4) Consolidated Statement of Cash Flows ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 19 (5) Note on assumptions for going concern ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 20 (6) Basis of Presenting Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 20 (7) Changes in Basis of Presenting Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・ 20 (8) Notes to Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 21
1) Consolidated Statements of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 21 2) Segment Information ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 22 3) Per-Share Information ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 25 5) Significant subsequent events ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 25
5.Non-Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 26 (1) Non-Consolidated Balance Sheets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 26 (2) Non-Consolidated Statements of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 28 (3) Non-Consolidated Statements of Changes in Net Assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 29
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1. Operating Results 1. Analysis of operating results
(1) Overview of the fiscal year ended March 31, 2012 During the consolidated fiscal year ended March 31, 2012, capital investment by manufacturers remained strong in
both semiconductor-related and liquid crystal panel-related markets of the Precision Equipment Business. In the Imaging Products Business, although the interchangeable lens type digital camera market expanded in all regions outside Japan, floods in Thailand in the second half of the fiscal year caused a slowdown in product supply for some manufacturers including the Group, and the compact digital camera market shrank in all regions except Asia. Furthermore, in the Instruments Business, the bioscience-related market faced a challenging environment, while industrial instruments-related markets remained on a par with the previous fiscal year.
Under these circumstances, the Group worked to quickly restart and reinforce its supply chain after the Great East Japan Earthquake, and was able to restore product supply during the first half of the fiscal year while also implementing reductions in electric power use. In addition, despite the floods in Thailand that led to submersion at Nikon (Thailand) Co., Ltd. and forced suspension of operations in October of last year, operations resumed in January of this year, approximately one month after water drainage was completed. By the end of March, with the cooperation of partner factories, the Group succeeded in returning its production volume to the normal level.
Furthermore, as the Group is striving to improve its corporate structure for main businesses through such efforts as shortening manufacturing lead times and cutting costs as well as devoting efforts to the creation of new businesses while working to generate markets through new products, cultivating markets in emerging countries, launching products that accurately meet market needs, and increasing the speed and strengthening the coordination of its business processes.
As a result of the foregoing, net sales for the consolidated fiscal year increased by 31,138 million yen (3.5%) year on year to 918,651 million yen, operating income climbed by 26,027 million yen (48.2%) year on year to 80,080 million yen, ordinary income was up 33,571 million yen (60.2%) year on year to 89,383 million yen, resulting in net income of 59,305 million yen, an increase of 31,993 million yen (117.1%) year on year.
Performance by business segment is as follows. 1) Precision Equipment Business Of the markets related to the business, both semiconductor-related and liquid crystal panel-related markets saw
ongoing strong capital investment made by manufacturers. Amid this situation, the Group strove to expand sales in the IC steppers and scanners field, focusing on the NSR-
S620D ArF immersion scanner compatible with double patterning. Shipments also commenced for the new product NSR-S621D which has even greater precision and productivity.
In the LCD steppers and scanners field, sales were steady for devices used for mid-to-small size high definition displays optimal for mass production of smart-phone/tablet terminals, etc. The Group also focused its efforts on the development of new products, and began shipments of products including the FX-66S with a multi-lens system that offers improved productivity and resolution.
In addition, the Group made continuous efforts across the business as a whole to improve the profit structure, including shortening of manufacturing periods and cutting costs.
As a result of the foregoing, net sales increased by 18.9% from the previous fiscal year to 248,145 million yen, with operating income posted at 42,723 million yen.
2) Imaging Products Business Of the markets related to the business, the interchangeable lens type digital camera market shrank in Japan, partly
due to the effect of the earthquake, but the market expanded in the United States, Europe, and Asia. Meanwhile, the compact digital camera market shrank in all regions except Asia.
Amid this situation, the sales volume of interchangeable lens type digital cameras exceeded the level of the previous fiscal year thanks to positive results in the first half of the fiscal year, offsetting lower production levels of digital single-lens reflex (SLR) cameras in the wake of Thai floods in the latter half, in addition to robust performance of the Nikon 1 series launched in October of last year. In addition, the next-generation flagship camera D4 and the D800 with its overwhelmingly high definition and advanced image quality were launched to great acclaim in March of this year.
Amid a shrinking compact digital camera market, the Group achieved record high sales volume exceeding previous years by a wide margin and winning top share of the European market for the fiscal year, as a result of strong performance by the P/S series including the high performance model COOLPIX P7100, slim model COOLPIX S6200 and COOLPIX S3100.
Sales of interchangeable lenses grew steadily, and the cumulative production of NIKKOR lenses reached 65 million units in October of last year.
Moreover, the Group pressed ahead with the cultivation of markets in emerging countries, establishing the sales subsidiary Nikon Middle East FZE in Dubai, United Arab Emirates, to strengthen the sales and service system in the Middle East, Africa, and West and South Asia.
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As a result of the foregoing compounded by effects of a strong yen, net sales decreased by 1.6% from the previous fiscal year to 587,127 million yen, with operating income posted at 53,971 million yen.
3) Instruments Business Of the markets related to the business, the bioscience-related markets faced a challenging environment due to the
effects of deferred government budget implementation in the United States, Europe, and others. In the industrial instruments-related markets, although capital investment related to smart-phone/tablet terminals was robust, the markets were affected by restraint in capital investment related to semiconductors and electronic components.
Under these circumstances, the Group strove to expand sales in the bioscience business by introducing new items that will become core products, such as the ECLIPSE Ni/Ci series of upright biological microscopes that are widely used in research and clinical fields, in addition to system products targeting the cutting-edge research fields.
In the industrial instruments business, the Group worked to expand sales of existing products such as measuring microscopes, as well as focusing its efforts on development and sales of non-contact 3D metrology devices including X-ray devices.
As a result of the foregoing, net sales decreased by 2.5% from the previous fiscal year to 56,000 million yen, while operating loss was 3,166 million yen.
4) Other Businesses In the customized products business, the Group strived to expand sales of space-related products and solid-state
lasers, and saw significant growth in sales. In the Glass Business, the Group made efforts to expand sales of LCD photomask substrates and optical components.
As a result of the foregoing, net sales of these businesses increased by 11.7% from the previous fiscal year to 27,379 million yen, with operating income reaching 4,180 million yen.
(2) Forecast for the fiscal year ending March 31, 2013 As regards the business segments of the Nikon Group, the Precision Equipment Business is expected to be affected
by rapidly constricting capital investment by manufacturers in the semiconductor market and liquid crystal panel market. In the Instruments Business, the outlook for the bioscience market and industrial instruments market is expected to remain uncertain. In the Imaging Products Business, however, the digital camera market is predicted to continue growing.
Under these circumstances, the Nikon Group will endeavor to expand its main businesses and improve profitability through the timely market launch of competitive products that can offer new value, while broadening the scope of the Nikon Brand by cultivating new businesses using Nikon’s core technologies in fields such as health and medicine. In addition, the Group will strive to optimize the overall business process by strengthening coordination among the business functions, create a corporate structure capable of dealing with environmental changes with flexibility and a sense of speed, and deploy its business activities globally with constant attention to CSR. Furthermore, the Group will make efforts to further reinforce the risk-management system, while endeavoring to minimize damage in a disaster.
Through these measures, the Nikon Group is committed to continued growth, and continually offering new value. Current forecast for the fiscal year ending March 31, 2013 is as below.
(From April 1, 2012 to March 31, 2013) Net sales Operating income Ordinary income Net income
Full year Million yen % 1,030,000 12.1
Million yen % 90,000 12.4
Million yen % 94,000 5.2
Million yen % 65,000 9.6
The above forecast is based on the following foreign currency exchange rate: 1 US dollar = 80 yen, 1 Euro = 105 yen
*Forecasts in this disclosure are made by management in light of information currency available. A number of factors could cause actual results to differ materially from disclosed as above.
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2. Analysis of financial position
Financial position as of March 31, 2012 as compared with the end of the previous fiscal year is as follows. The balance of current assets as of March 31, 2012 increased by 18,519 million yen to 609,474 million yen
(590,954 million yen at the end of the previous fiscal year). This is due mainly to the increase in notes and accounts receivable-trade and inventories.
The balance of noncurrent assets as of March 31, 2012 increased by 11,801 million yen to 250,755 million yen (compared to 238,954 million yen at the end of the previous fiscal year) mainly due to the purchase of substitute equipment due to flood damage in Thailand.
The balance of current liabilities as of March 31, 2012 decreased by 286 million yen to 342,009 million yen (compared to 342,295 million yen at the end of the previous fiscal year) largely due to the decrease in notes and accounts payable-trade in spite of the increase in accounts payable related to the purchase of substitute equipment.
The balance of noncurrent liabilities as of March 31, 2012 decreased by 13,789 million yen to 84,604 million yen (98,393 million yen at the end of the previous fiscal year). This is attributable mainly to a reduction in the provision for retirement benefits as a result of lump-sum pension contributions.
The balance of net assets as of March 31, 2012 increased by 44,396 million yen to 433,616 million yen (389,220 million yen at the end of the previous fiscal year). This is attributable mainly to the posting of 59,305 million yen in net income.
During the year ended March 31, 2012, cash flows from operating activities amounted to 15,073 million yen as a
result mainly of the posting of 86,168 million yen in income before income taxes, the increase by 18,681 million yen in notes and accounts receivable-trade and the increase by 27,703 million yen in inventories, and decrease by 15,530 million yen in notes and accounts payable-trade. Cash flows from investing activities resulted in an expenditure of 49,144 million yen mainly as a result of an expenditure of 35,773 million yen for the purchase of property, plant and equipment. Cash flows from financing activities resulted in an expenditure of 15,150 million yen due mainly because of 12,278 million yen in cash dividents paid.
(Reference) Changes in Cash Flow-Related Indices
March 31,
2008 March 31,
2009 March 31,
2010 March 31,
2011 March 31,
2012
Equity ratio (%) 47.9 50.5 50.2 46.8 50.3
Equity ratio based on market value (%)
129.2 58.5 109.2 81.9 115.8
Cash flow to interest-bearing debt ratio (years)
0.6 11.4 1.0 0.7 5.7
Interest coverage ratio (times) 80.7 8.3 89.5 128.0 14.2
(Notes) Equity ratio: Equity/Total assets Equity ratio based on market value: Total market value of shares/Total assets Cash flow to interest-bearing debt ratio: Interest-bearing debt/Operating cash flows Interest coverage ratio: Operating cash flows/Interest payments *All indices are calculated based on consolidated financial data. *The total market value of shares is calculated in accordance with the formula: final share price as of the end of the fiscal year x numbers of shares issued (after deducting treasury stock).
*Operating cash flows are the cash flows from operating activities as indicated in the consolidated cash flow statement. Interest-bearing debts include the short-term and long-term loans payable as posted in the consolidated balance sheet. As regards interest payments, the amount of interest paid as shown in the consolidated cash flow statement is used.
3. Shareholder returns policy and dividends
Nikon’s basic dividend policy is to improve the reflection of business performance based on paying a steady,
continuous dividend, as well as expanding the investment for the future growth and strengthening of competitiveness. More specifically, its present goal is to provide a total return ratio of 25% or more.
The Group set the year-end dividends at 21 yen per share, an increase of 7 yen from previous fiscal year, due to the increase in both revenue and profit. As a result, cash dividends for the fiscal year ended March 31, 2012 will be 38 yen per share including 17 yen of interim dividend.
As for the dividends of the fiscal year ending March 31, 2013, the Group plans to pay 41 yen per share including 19 yen of interim dividend.
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4. Business and Other Risks
There is a possibility that the business performance of the Nikon Group will be impacted significantly by various factors that may arise in the future. Following are principal matters that are believed to be likely risk factors in the promotion of business operations by the Group.
Matters concerning the future as stated herein are based on the Nikon Group's beliefs as of the date of the preparation hereof.
(1) Unique business environment and circumstances
[Unique environment of main businesses] The semiconductor industry, which is the main target market for the IC steppers and scanners handled by the
Precision Equipment Business, is characterized as an industry with drastic changes in the business cycle, although this inclination has been waning in recent years, due to the diversification of end products. As a result, an over-supply of semiconductor devices in the market poses the risk of a decrease in the demand for steppers, due to a cutback in capital investment by semiconductor manufacturers and an accompanying increase in inventories. However, it is difficult to predict the timing or the duration of such a situation or the degree of fluctuation. As an additional characteristic of customer behavior in the same industry, orders are subject to postponement or cancellation even after they have been placed, resulting in a structure that is prone to increases in inventory during periods of slow demand. The demand for LCD steppers and scanners, which is dependent on the climate of the LCD panel market, may experience a rapid decline, should LCD panel prices drop as a result of an over-supply.
The market for digital cameras, which are the leading products of the Imaging Products Business, continues to show a tendency to expand further. While a further increase in the penetration rate is expected and the markets in emerging countries have potential to grow, there is a possibility of the market undergoing changes such as the decline in demand for digital cameras, due to such factors as fluctuation of the economy of the respective regions and the emergence of strong competition, such as new digital equipment.
In the Instruments Business, the microscope market is becoming saturated, leading to the possibility of a change in competition structure, as a result of an industry restructuring or the like. Further, the Industrial Instruments Business is susceptible to the effect of the economic and facility trends of various industries, including semiconductors, power generation, electronic components, automobiles and machine tools.
Such changes in the business environment are likely to have a considerable impact on the business performance and the financial position of the Nikon Group.
(2) Dependence on specific suppliers In each business that it is engaged in, the Nikon Group is sometimes dependent on specific suppliers for such
things as raw materials, key components, and finished products that have been outsourced. Although the Group is making efforts to ensure stable procurement while maintaining a close relationship with specific suppliers, there is a possibility that the Group's profit and financial position will be adversely affected in the event of a steep increases in purchase price or a material problem with procurement due to a sudden surge in demand, natural disasters, quality issues, as well as policy changes or bankruptcy on the part of a specific supplier.
(3) Dependence on specific customers Moves such as mergers and partnerships are progressing within the semiconductor industry, which is a
customer of the Precision Equipment Business, in order to cope with expanding capital expenditure and increasingly diversified technology development. Further, selective elimination is proceeding as the competitive superiority or inferiority of various companies becomes more defined, based on the technologies owned and the characteristics of the devices manufactured. Competition among companies is intensifying also in the LCD panel industry as capital expenditures expand, resulting in some moves for industry restructuring. Capital investment plans of the Nikon Group's major customers are volatile owing to the foregoing circumstances. Hence, there is a possibility that the Group's profit and financial position will be adversely affected should; for example, a customer drastically reduce order volumes or take its business to a competitor, or should problems arise for any reason with respect to debt payment by a customer.
(4) Ability to develop new products and investment in development Being subject to intense competition, the Nikon Group's core businesses are constantly required to develop new
products by continuing to engage in highly advanced research and development. Therefore, it is necessary to continue to invest in product development, regardless of the fluctuations in the Group's profit.
In the Precision Equipment Business, there is a possibility of a decrease in profit in the event of failure to develop new products and/or next-generation technology in a timely manner, or of rejection by the market of a technology developed by the Nikon Group. Further, should a competitor acquire a patent on a new technology, there is a danger that the production and/or sale of a product will be suspended or of a decrease in profit margin due to the payment of royalty, as well as the possibility that the adoption of a new technology by a competitor's device will cause the price of Nikon's devices to deteriorate. Further intensification of price competition is expected with respect to LCD steppers and scanners in the event of market entries by newcomers or introduction
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of a new technology, which may impact profit. In the Imaging Products Business, given the rapid technological advances in and increasing sophistication and
diversification of digital cameras, continual investment is required for the development of new technologies and new products. However, there is a conceivable possibility that a technology or a product that was developed will not lead to an increase in profit should the investment fail to produce adequate results or should there be an abrupt shift in demand to higher functioning digital equipment. As with the Precision Equipment Business, should a competitor acquire a patent on a new technology, there is a danger that the production and/or sale of a product will be suspended or of a decrease in profit margin due to the payment of royalty, which may impact profit.
(5) Intensification of price competition Competition is intensifying with respect to digital cameras, which are the leading products of the Imaging
Products Business, with both Japanese and overseas electrical equipment manufacturers entering the market in addition to the traditional camera manufacturers. As the product life cycle is short, particularly in the case of compact digital cameras, all companies have the tendency to try to sell mass-produced products within a short period, with the slowing market growth further spurring price competition.
As for IC steppers and scanners, while the development of cutting-edge technologies is progressing, there is a possibility that competitors will launch an offensive with low-priced steppers and scanners.
In the Instruments business, the maturing of the microscope market is further promoting the competition to differentiate products, while fanning price competition in the mid- and low-range markets. There is a possibility that the Nikon Group's profit and financial position will be affected adversely, should there be a sharp and sudden decrease in prices.
(6) Overseas business operations The Nikon Group is dependent on foreign countries for a significant portion of its production and sales
activities. Hence, it is affected by changes in various import and export laws, tax systems, and regulation in Japan and other countries in which the Group operates. Further, in conducting business operations overseas, there is a possibility that major problems will be encountered and/or losses will be incurred in conducting business activities, due to such risks as changes in political regimes or economic climate; social chaos caused by riots, terrorism, wars, infectious diseases, etc.; problems with such infrastructures or logistics-related functions as water, electricity, and communications network due to natural disaster; and difficulty hiring human resources or loss thereof. There is a possibility that the Nikon Group's profit and financial status will be affected adversely as a result of production and sales being limited by the foregoing.
(7) Risk of fluctuations in exchange rate The Nikon Group is highly dependent on overseas market, with overseas sales accounting for as much as
85.8% of net sales. While the Group is appropriately hedging foreign exchange risks in accordance with sales volumes and the sales region, the net sale of and profit from products and services subject to foreign currency transactions, or the yen values of the income, losses, assets and liabilities of overseas consolidated subsidiaries will be affected should there be a sharp fluctuation in foreign exchange rates.
(8) Fund procurement risk While the Nikon Group is procuring funds as the need arises with due consideration for the balance between
long-term and short-term funds, as well as between direct and indirect financing, there is a possibility that such effects as an increase in interest rates on the fund procured or limitation of the means for procuring fund may arise should the financial market climate deteriorate further. There is a possibility that fund procurement by the Group will also be impacted should the rating of the Company's bond be revised downward due to a decline in business performance.
(9) Risk relating to the protection of and litigations on intellectual property rights The Nikon Group acquires and holds numerous intellectual property rights as it develops products. In some
cases, the Group licenses such intellectual property rights to other companies. Although utmost efforts are being made for the maintenance and protection of these intellectual property rights, there is a possibility that considerable litigation expenses will be incurred should a lawsuit be filed in connection with an unlicensed use of the Group's intellectual property rights by another company.
Further, there is a possibility that other companies, individuals, or entities will file a complaint against the Nikon Group for an alleged infringement on their intellectual property rights, although the Group is paying adequate attention to avoiding infringing third-party intellectual property rights in conducting product development. Should such a situation occur, there is a possibility that the Group's profit and financial position will be affected significantly.
(10) Securing key personnel and outflow of human resources and know-how The Nikon Group is supported by its employees, who possess advanced technical and other expertise and
abilities, and securing such human resources is becoming increasingly more important in order to win through intense competitions in the market. However, should labor fluidity increase further for some reason, there is a
― 10 ―
possibility that such key personnel will resign, taking their expertise and know-how with them. In order to minimize such outflow of expertise and know-how, the internal transmission, standardization and sharing of proprietary technologies and skills are being promoted. While it is important to secure competent human resources locally overseas, it is believed that the possibility of an outflow of human resources is particularly high in regions with high labor fluidity.
Since long-term education and training are essential in order to foster human resources given the rapid technological renovations in the business that the Group is engaged in, replacing key personnel that depart may be difficult at times and may thus adversely affect the Group's future growth, profit and financial position.
(11) Information Leaks The Nikon Group retains such important information as technical information, corporate information, and the
personal information of its customers and other persons concerned. Among other things, the Group is enhancing its internal regulations on the handling of information and educating its employees, while thoroughly controlling external access to such information and improving the level of storage security. However, in the rare event of leakage of the Company's confidential information, including technical information, there is a possibility that the corporate value of the Nikon Group will be damaged. Further, should corporate or personal information leak out, the Group would not only suffer damages to its credibility, but would also be subject to claims for compensation from such entities as business partners, customers, employees or other entities suffering the effect of the leak. Should this occur, there is a possibility that the Group's profit and financial position will be affected adversely as tremendous costs will be necessary for various activities related to the recovery of trust, compensation to subject companies and individuals, implementation of measures to prevent recurrence, and other necessities.
(12) Defects in products and services As concerns the Nikon Group's products and services, advanced quality assurance systems are in place within
Japanese and overseas Group companies, as well as production contractors, in order to provide customers with highly trustable and sophisticated products. However, in the rare event that a customer suffers a loss due to a defect in a product or service, there is a possibility that profit and financial position will be adversely affected, there being the risk that large amounts will be incurred in repair expenses and costs related to liability, recall, disposal of products and the like, in addition to the decreased desire of customers to purchase the Group's products and services due to a decrease in customer trust in the Nikon brand.
(13) Occurrence of natural disasters, etc. Due attention is being paid to measures relating to such natural disasters as earthquakes, fires and flood, and
measures to counter the expansion of such infectious diseases as new strains of influenza, giving priority in particular to the promotion of the business continuity plan (BCP), which was formulated as a part of earthquake countermeasures. However, there is the risk that operations will be suspended and production and shipment will be delayed, should the Group's development or productions sites, suppliers or other relevant parties suffer critical damage. There is a possibility that the Group's profit and financial position will be adversely affected, should net sales decrease and considerable expenses be incurred for business recovery as a result thereof.
(14) Damages to brand value The Nikon Group is making utmost efforts to protect and enhance the 'Nikon Brand,' which was fostered over
years of corporate management marked with integrity and provision of products and services that are worthy of customer trust. However, there is a possibility that the Group's profit and financial position will be adversely affected should trust in the brand decline and the value of the Nikon brand be damaged, as a result of the circulation of negative reputation or evaluation of the Group's technologies, products or services.
― 11 ―
2. Status of Nikon Group
The Nikon Group is comprised of Nikon Corporation (the Company), its 86 subsidiaries, and 11 affiliates. While the
principal operations of the Group are manufacturing and sales relating to the precision equipment, imaging product, instruments, and other businesses, it is also engaged in other operations and activities incidental thereto, such as services.
* Company engaged in precision equipment business
** Company engaged in imaging products business
〔 Nikon Corporation 〕
Precision Equipment Business Imaging Products Business Instruments Business Other Business
Customers
Subsidiaries ** Nikon Inc. *** Nikon Instruments Inc. + Nikon Canada Inc. * Nikon Precision Inc. and five other companies
Affiliate one company
Subsidiaries ** Nikon Europe B.V. *** Nikon Instrument Europe B.V.+ Nikon AG + Nikon GmbH + Nikon France S.A.S. + Nikon U.K. Ltd. * Nikon Precision Europe GmbH** Nikon Nordic AB ** Nikon Polska Sp.z.o.o.
and seven other companies
Subsidiaries ** Nikon Hong Kong Ltd. ** Nikon Singapore Pte Ltd * Nikon Precision Korea Ltd. * Nikon Precision Taiwan Ltd. ** Nikon Imaging (China) Sales Co., Ltd.** Nikon Imaging Korea Co., Ltd.
and nine other companies
*** Company engaged in instruments business ****Company engaged in other business + Company engaged in multiple businesses
(Japanese sales & services companies) (North American sales & services companies) (European sales & services companies)
Subsidiaries ** Nikon Imaging Japan Inc. *** Nikon Instech Co., Ltd. ** Nikon Vision Co., Ltd. * Nikon Tec Corporation and three other companies
Affiliates
**** Nikon-Essilor Co., Ltd. **** Nikon-Trimble Co., Ltd. and one other company
Flow of products (outsourced processing)
Flow of manufacturing components
Flow of products
Subsidiaries ** Tochigi Nikon Corporation * Tochigi Nikon Precision Co., Ltd. ** Sendai Nikon Corporation
(Asian and Oceanian sales & services companies)
* Miyagi Nikon Precision Co., Ltd. **** Hikari Glass Co., Ltd.
and three other companies
Subsidiaries
** Nikon (Thailand) Co., Ltd.
** Nikon Imaging (China) Co., Ltd.
and six other companies
Affiliates two companies
Subsidiaries **** Nikon Systems Inc. **** Nikon Business Services Co., Ltd.
(Overseas manufacturing companies) (Japanese manufacturing companies)
*** Nikon Metrology NV and seventeen other companies
Affiliates five companies
Subsidiaries
**** Nikon Americas Inc.
**** Nikon Holdings Europe B.V.
**** Nikon Holdings Hong Kong Limited
(Overseas holding companies) (Other)
― 12 ―
3. Management Policies
(1) Company’s Basic Management Policies
The Company’s management vision, under the business philosophy of “Trustworthiness and Creativity,” is “Our Aspirations.” Our Philosophy “Trustworthiness and Creativity” Our Aspirations “Meeting needs. Exceeding expectations.”
・ Providing customers with new value that exceeds their expectations. ・ Sustaining growth through a break with the past and a passionate commitment by one and all. ・ Maximizing our understanding of light to lead the way towards transformation and a new future. ・ Maintaining integrity in order to contribute to social prosperity
(2) Targeted management indices
The Group made a unified effort to vigorously progress for the achievement of its goal, as set out in the Medium Term Management Plan announced in June 2010, to realize “the Nikon Group that keeps on providing customers with new values and generates sustainable growth.”
A new Medium Term Management Plan is announced in May 2012, with a performance target toward March 31, 2015. Under the plan, we aim to achieve 1,250 billion yen in net sales and 150 billion yen in operating income for the fiscal year ending March 31, 2015.
(3) Medium and long-term management strategies and issues to be addressed
For the Nikon Group to continuously provide new value, its medium- and long-term management will be effected by focusing on the following measures.
・ To constantly provide customers with new value, and further grow the Nikon brand. ・ To realize a Nikon Group with a strong corporate structure to deal with environmental changes with flexibility and a sense of speed. ・ To achieve a solid leading position for existing businesses. ・ To move ahead with advances into new domains, and discover businesses that will be pillars of the Nikon Group within the fiscal years of the plan. ・ To recognize the importance of Corporate Social Responsibility (CSR), and contribute to the sustainable development of society.
Furthermore, in light of the Great East Japan Earthquake and Thai flood, the entire Group is making efforts to
revise and strengthen the BCP (Business Continuity Plan) to prepare for major earthquakes or other disasters that are anticipated in the future.
― 13 ―
4. Consolidated Financial Statements
(1) Consolidated Balance Sheets
(Million yen)
As of March 31, 2011 As of March 31, 2012
Assets
Current assets
Cash and deposits 181,077 132,404
Notes and accounts receivable-trade 123,077 137,533
Inventories 236,407 263,033
Deferred tax assets 42,640 47,110
Other 15,118 34,061
Allowance for doubtful accounts (7,365) (4,667)
Total Current Assets 590,954 609,474
Noncurrent assets
Property, plant and equipment
Buildings and structures, net 43,362 37,807
Machinery, equipment and vehicles, net 34,003 35,200
Land 14,777 14,609
Lease assets, net 5,794 4,901
Construction in progress 7,566 23,809
Other, net 13,511 14,615
Total property, plant and equipment 119,016 130,943
Intangible assets
Total intangible assets 39,473 33,085
Investments and other assets
Investment securities 56,303 55,355
Deferred tax assets 17,604 13,293
Other 6,817 18,284
Allowance for doubtful accounts (260) (207)
Total investments and other assets 80,465 86,727
Total noncurrent assets 238,954 250,755
Total assets 829,909 860,230
― 14 ―
(Million yen)
As of March 31, 2011 As of March 31, 2012
Liabilities
Current liabilities
Notes and accounts payable-trade 171,735 155,338
Short-term loans payable 16,732 18,350
Lease obligations 2,422 2,163
Accrued expenses 54,545 54,751
Income taxes payable 2,520 15,076
Advances received 63,626 54,214
Provision for product warranties 7,296 7,594
Other 23,415 34,519
Total current liabilities 342,295 342,009
Noncurrent liabilities
Bonds payable 40,000 40,000
Long-term loans payable 24,700 22,900
Lease obligations 3,620 2,953
Provision for retirement benefits 14,951 3,700
Provision for directors' retirement benefits 606 -
Asset retirement obligations 2,324 2,365
Other 12,191 12,684
Total noncurrent liabilities 98,393 84,604
Total liabilities 440,689 426,613
Net assets
Shareholders' equity
Capital stock 65,475 65,475
Capital surplus 80,711 80,711
Retained earnings 272,227 319,823
Treasury stock (13,173) (12,992)
Total shareholders' equity 405,241 453,017
Accumulated other comprehensive income
Valuation difference on available-for-sale securities 4,450 3,061
Deferred gains or losses on hedges (696) (1,592)
Foreign currency translation adjustment (20,201) (21,474)
Total accumulated other comprehensive income (16,448) (20,005)
Subscription rights to shares 427 604
Total net assets 389,220 433,616
Total liabilities and net assets 829,909 860,230
― 15 ―
(2) Consolidated Statements of Income and Statements of Comprehensive Income
①Consolidated Statements of Income
(Million yen)
Year ended March 31, 2011 Year ended March 31, 2012Net sales 887,512 918,651
Cost of sales 575,535 567,000
Gross profit 311,977 351,651
Selling, general and administrative expenses 257,924 271,570
Operating income 54,052 80,080
Non-operating income
Interest income 632 941
Dividends income 1,061 1,130
Foreign exchange gains 2,995 4,079
Equity in earnings of affiliates 1,231 1,535
Other 3,939 4,230
Total non-operating income 9,860 11,917
Non-operating expenses
Interest expenses 945 1,037
Other 7,156 1,576
Total non-operating expenses 8,101 2,614
Ordinary income 55,811 89,383
Extraordinary income
Gain on sales of noncurrent assets 91 159
Gain on sales of investment securities 30 65
Insurance income - 15,920
Total extraordinary income 121 16,144
Extraordinary loss
Loss on retirement of noncurrent assets 1,000 250
Loss on sales of noncurrent assets 47 4
Impairment loss 397 6,502
Loss on sales of investment securities 82 96
Loss on valuation of investment securities 4,512 0 Loss on adjustment for changes of accounting
standard for asset retirement obligations 1,073 -
Loss on disaster 2,313 12,505
Total extraordinary losses 9,427 19,360
Income before income taxes 46,505 86,168
Income taxes 19,193 26,862
Income before minority interests 27,312 59,305
Net income 27,312 59,305
― 16 ―
②Consolidated Statements of Comprehensive Income
(Million yen)
Year ended March 31, 2011 Year ended March 31, 2012Income before minority interests 27,312 59,305
Other comprehensive income
Valuation difference on available-for-sale securities (1,595) (1,398)
Deferred gains or losses on hedges (666) (895)
Foreign currency translation adjustment (4,230) (1,272) Share of other comprehensive income of associates
accounted for using equity method (496) 9
Total other comprehensive income (6,989) (3,557)
Comprehensive income 20,323 55,748
(Breakdown)
Comprehensive income attributable to owners of the parent 20,323 55,748
― 17 ―
(3) Consolidated Statements of Changes in Net Assets Year ended March 31, 2011
(Million yen)
Shareholders’ equity
Capital stock Capital surplus Retained earnings Treasury stock
Total shareholders’ equity
Balance of April 1, 2010 65,475 80,711 248,368 (13,353) 381,202
Changes of items during the period
Dividents from surplus (1,585) (1,585)
Dividents from surplus (interim dividents)
(1,982) (1,982)
Net income or loss 27,312 27,312
Purchase of treasury stock (12) (12)
Disposal of treasury stock (115) 192 77
Changes in the number of consolidated subsidiaries
229 229
Net changes of items other than shareholders’ equity
Total changes of items during the period - - 23,858 180 24,039
Balance of March 31, 2011 65,475 80,711 272,227 (13,173) 405,241
Valuation and translation adjustments
Valuation
difference on available-for-sale
securities
Deferred gains or losses on hedges
Foreign currency
translation adjustments
Total valuation and translation
adjustments
Subscription rights to
shares
Total net assets
Balance of April 1, 2010 6,060 (30) (15,489) (9,459) 326 372,069
Changes of items during the period
Dividents from surplus (1,585)
Dividents from surplus (interim dividents)
(1,982)
Net income or loss 27,312
Purchase of treasury stock (12)
Disposal of treasury stock 77
Changes in the number of consolidated subsidiaries
229
Net changes of items other than shareholders’ equity
(1,610) (666) (4,712) (6,989) 100 (6,888)
Total changes of items during the period
(1,610) (666) (4,712) (6,989) 100 17,150
Balance of March 31, 2011 4,450 (696) (20,201) (16,448) 427 389,220
― 18 ―
Consolidated Statements of Changes in Net Assets Year ended March 31, 2012
(Million yen)
Shareholders’ equity
Capital stock Capital surplus Retained earnings Treasury stock
Total shareholders’ equity
Balance of April 1, 2011 65,475 80,711 272,227 (13,173) 405,241
Changes of items during the period
Dividents from surplus (5,550) (5,550)
Dividents from surplus
(interim dividents) (6,740) (6,740)
Net income or loss 59,305 59,305
Purchase of treasury stock (6) (6)
Disposal of treasury stock (111) 186 75
Changes in the number of
consolidated subsidiaries 692 692
Net changes of items other
than shareholders’ equity
Total changes of items during
the period - - 47,595 180 47,776
Balance of March 31, 2012 65,475 80,711 319,823 (12,992) 453,017
Valuation and translation adjustments
Valuation
difference on available-for-sale
securities
Deferred gains or losses on hedges
Foreign currency
translation adjustments
Total valuation difference on
available-for-sale securities
Subscription rights to
shares
Total net assets
Balance of April 1, 2011 4,450 (696) (20,201) (16,448) 427 389,220
Changes of items during the period
Dividents from surplus (5,550)
Dividents from surplus (interim dividents)
(6,740)
Net income or loss 59,305
Purchase of treasury stock (6)
Disposal of treasury stock 75
Changes in the number of consolidated subsidiaries
692
Net changes of items other than shareholders’ equity
(1,388) (895) (1,272) (3,557) 177 (3,379)
Total changes of items during
the period (1,388) (895) (1,272) (3,557) 177 44,396
Balance of March 31, 2012 3,061 (1,592) (21,474) (20,005) 604 433,616
― 19 ―
(4) Consolidated Statements of Cash Flows
(Million yen)
Year ended March 31, 2011 Year ended March 31, 2012
Cash flows from operating activities
Income before income tax 46,505 86,168
Depreciation and amortization 34,033 32,570
Impairment loss 399 12,127
Increase (decrease) in allowance for doubtful accounts (602) (2,424)
Increase (decrease) in provision for product warranties 1,042 366
Increase (decrease) in provision for retirement benefits (2,134) (11,186)
Increase (decrease) in provision for directors' retirement benefits 3 (606)
Interest and dividends income (1,694) (2,072)
Equity in (earnings) losses of affiliates (1,231) (1,535)
Interest expenses 945 1,037
Loss (gain) on sales of noncurrent assets (43) (155)
Loss on retirement of noncurrent assets 1,007 1,022
Loss (gain) on sales of investment securities 52 30
Loss (gain) on valuation of investment securities 4,512 0
Decrease (increase) in notes and accounts receivable-trade (14,843) (18,681)
Decrease (increase) in inventories (34,032) (27,703)
Increase (decrease) in notes and accounts payable-trade 47,027 (15,530)
Increase (decrease) in advances received 29,303 (9,608)
Other, net 23,451 (16,862)
Subtotal 133,701 26,959
Interest and dividends income received 2,465 3,275
Interest expenses paid (965) (1,063)
Income taxes (paid) refund (11,587) (14,098)
Net cash provided by (used in) operating activities 123,613 15,073
Cash flows from investing activities
Purchase of property, plant and equipment (22,885) (35,773)
Proceeds from sales of property, plant and equipment 722 1,303
Purchase of investment securities (433) (789)
Proceeds from sales of investment securities 685 392
Decrease (increase) in loans receivable 398 (1,225)
Proceeds from compensation for expropriation 2,317 -
Other, net (4,392) (13,053)
Net cash provided by (used in) investing activities (23,589) (49,144)
Cash flows from financing activities
Net increase (decrease) in short-term loans payable 121 (1,548)
Proceeds from long-term loans payable 10,000 2,900
Repayment of long-term loans payable (10,530) (1,760)
Proceeds from issuance of bonds 19,892 -
Redemption of bonds (32,900) -
Cash dividends paid (3,573) (12,278)
Other, net (3,131) (2,463)
Net cash provided by (used in) financing activities (20,122) (15,150)
Effect of exchange rate change on cash and cash equivalents (3,741) (665)
Net increase (decrease) in cash and cash equivalents 76,160 (49,886)
Cash and cash equivalents at beginning of period 104,669 181,061Increase in cash and cash equivalents from newly consolidated subsidiary 231 536
Cash and cash equivalents at end of period 181,061 131,711
― 20 ―
(5) Note on assumptions for going concern Not applicable
(6) Basis of Presenting Consolidated Financial Statements 1. Scope of Consolidation (1)Number of Consolidated subsidiaries: 68 companies Principal subsidiaries:
Tochigi Nikon Corporation , Tochigi Nikon Precision Co., Ltd., Sendai Nikon Corporation , Miyagi Nikon Precision Co., Ltd., Nikon Imaging Japan Inc., Nikon Instech Co., Ltd., Nikon (Thailand) Co., Ltd., Nikon Imaging (China) Co., Ltd., Nikon Hong Kong Ltd., Nikon Inc., Nikon Precision Inc., Nikon Europe B.V. and others.
[Additions: 2 companies] Nikon Staff Service Corporation, Nikon India Pvt. Ltd.
[Exclusions: 2 companies]
Two subsidiaries of Nikon Metrology NV (Completion of liquidation) (2)Non-consolidated subsidiaries: 18 companies
Major company name : Nanjing Nikon Jiangnan Optical Instrument Co., Ltd.
Since these companies are small in scale, their combined assets, net sales, net income(the company’s interest share) and retained earnings(the company’s interest share) have a minimal effect on the company’s consolidated financial statements, and they are insignificant in general, they are not included in the scope of consolidation.
2. Scope of Equity Method (1)Number of Associated Company accounted for by Equity Method : 2 companies
Company name : Nikon-Essilor Co., Ltd. , Nikon-Trimble Co., Ltd. (2)Number of Non-consolidated company not accounted for by Equity Method : 18 companies
Major company name : Nanjing Nikon Jiangnan Optical Instrument Co., Ltd. (3) Number of Associated company not accounted for by Equity Method : 9 companies
Major company name : Nihon System Seigyo K.K.
Since these companies are small in scale, net income(the company’s interest share) and retained earnings(the company’s interest share) have a minimal effect on the company’s consolidated financial statements, and they are insignificant in general.
(7) Changes in Basis of Presenting Consolidated Financial Statements
Additional Information (Application of “Accounting Standard for Accounting Changes and Error Corrections,” etc.)
The Group applies the “Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Statement No. 24 of December 4, 2009) and the “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No. 24 of December 4, 2009) for accounting changes and corrections of prior period errors which are made from the beginning of the current fiscal year.
Retirement benefits
During the current fiscal year, the sum of 14,600 million yen was contributed to the retirement benefit trust with a view to strengthening the financial soundness of its retirement benefits plan.
― 21 ―
(8) Notes to Consolidated Financial Statements 1) Consolidated Statements of Income
1. Principal Items and Amounts under Selling, General and Administrative Expenses Fiscal year ended
March 31,2011 (From April 1 2010 to March 31, 2011)
Fiscal year ended March 31,2012
(From April 1 2011 to March 31, 2012)
Advertising expenses 65,824 million yen 74,388 million yen Provision for doubtful debts 65 million yen 34 million yen Provision for product warranties 4,833 million yen 2,966 million yen Salary and allowances 30,597 million yen 30,478 million yen Retirement benefit expenses 3,446 million yen 3,519 million yen Other personnel expenses 15,923 million yen 16,583 million yen Research and development 60,767 million yen 68,701 million yen 2. Insurance income
Nikon (Thailand) Co., Ltd., which incurred by flood damage in Thailand in October 2011, posted the settled amount of insurance income in connection with part of the losses of noncurrent assets and inventories affected by the disaster.
3. Impairment loss
The Nikon Group classifies by business segment the smallest units that create generally independent cash flows as well as important idle assets.
For the industrial instruments sector of our Instruments Business, the Group drafted a business plan that factors in lower total cash flow estimates for the initial period forecasted therein due to measures such as a narrowing of our product line following greater business selection and concentration efforts, as well as a revision of market growth rates, in response to changes in market conditions and business climate during the fiscal year under review. Consequently, goodwill relating to this business saw a decrease of book values to recoverable amounts resulting in the posting of a 6,497 million yen impairment loss.
Please note that recoverable amounts were measured based on value in use and future cash flows were discounted by 6.6%.
4. Loss on Disaster
The loss incurred in connection with the flood in Thailand, which took place in October, 2011, was posted as extraordinary loss.
The extraordinary loss mainly includes disposal and imparement loss of fixed assets of 6,790 million yen, disposal and write-down of inventory of 2,117 million yen, and restoration cost and others of 1,578 million yen.
― 22 ―
2) Segment Information 1. Outline of business segments reported The business segments the Group reports are the business units for which the Company is able to obtain respective financial information separately in order for the Board of Directors to conduct periodic investigation to determine distribution of management resources and evaluate their business results. The Group introduces company-based organization. Each operating division addresses the creation of consistent
responsibility system and thoroughness of decentralized operation. Each Company is composed of segments by products and services based on operating division. Therefore, the Group has three reportable segments: the Precision Equipment Business, the Imaging Products Business and the Instruments Business. The precision equipment business provides products and services of IC steppers and LCD steppers. The imaging
products business provides products and services of imaging products and its peripheral domain, like digital SLR cameras, compact digital cameras and interchangeable camera lenses. The instruments business provides products and services of microscopes, measuring instruments and inspection equipments.
2. Method for calculating the sales, income (loss), assets, and other items for reporting segments
The accounting methods for the reporting business segments are generally those set forth in “Material Items Which Form the Basis for Preparation of the Consolidated Financial Statements.” Figures for income of reporting segments are on an operating income basis. Inter-segment sales or transfer are based on current market price.
3. Information on the amounts of sales, income (loss), assets, and other items by reporting segments
Fiscal year ended March 31, 2011 (From April 1 2010 to March 31, 2011) (Million of yen)
Business segments reported
Precision Equipment
Imaging Products
Instruments Total Other 1 Total Adjustment 2
ConsolidateStatement
of income 3
Sales
Outside customers 208,613 596,928 57,451 862,994 24,518 887,512 - 887,512
Inter-segment sales or transfer 749 1,065 1,801 3,615 17,706 21,321 (21,321) -
Total 209,362 597,993 59,253 866,609 42,225 908,834 (21,321) 887,512
Segment income (loss) 2,711 53,558 (5,247) 51,022 3,051 54,073 (20) 54,052
Segment assets 215,076 214,735 53,382 483,194 63,202 546,396 283,512 829,909
Other items
Depreciation and amortization 12,524 12,465 2,045 27,035 6,998 34,033 - 34,033
Increase in tangible/intangible fixed assets
7,596 18,101 1,599 27,298 2,478 29,776 - 29,776
Notes: 1. The “Other Business” category incorporates operations not included in business segments reported, including the glass bussiness and the customized products business.
2. Segment income or loss adjustment includes elimination of intersegment transactions of minus 20 million yen. In addition, segment assets adjustment includes corporate assets not allocated to the respective reportable segments of 294,026 million yen and elimination of intersegment transactions of minus 10,513 million yen. Principal components of corporate assets are surplus funds (cash and deposits) held by the Company and its consolidated subsidiaries, long-term investments (investment securities) and deferred tax assets.
3. Segment income is adjusted with reported operating income on the consolidated financial statements. 4. From the three months ended June 30, 2011, the sport optics products business, formerly included in
“Other Business,” was transferred to the “Imaging Products Business.” Due to this change, the segment information for the fiscal year ended March 31, 2011 was prepared according to the revised business segment. As a result of revising the business segments, sales to outside customers, intersegment sales or transfer, segment income, segment assets, depreciation and amotization, increase in tangible/intangible fixed assets for the Imaging Products Business increased by 552 million yen, 14 million yen, 1,226 million yen, 655 million yen, 266 million yen, and 150 million yen respectively.
― 23 ―
Fiscal year ended March 31, 2012 (From April 1 2011 to March 31, 2012)
(Million of yen)
Business segments reported
Precision Equipment
Imaging Products
Instruments Total Other 1 Total Adjustment 2
Consolidated Statement of income 3
Sales
Outside customers 248,145 587,127 56,000 891,272 27,379 918,651 - 918,651
Inter-segment sales or transfer 855 1,350 1,637 3,843 31,575 35,419 (35,419) -
Total 249,001 588,477 57,637 895,116 58,954 954,071 (35,419) 918,651
Segment income (loss) 42,723 53,971 (3,166) 93,529 4,180 97,709 (17,629) 80,080
Segment assets 200,632 251,955 49,860 502,448 109,551 612,000 248,229 860,230
Other items
Depreciation and amortization 9,024 12,585 1,476 23,086 6,586 29,673 2,897 32,570
Increase in tangible/intangible fixed assets 7,341 33,298 1,233 41,873 9,058 50,932 4,982 55,914
Notes: 1. The “Other Business” category incorporates operations not included in business segments reported, including the glass business and the customized products business.
2. Segment income or loss adjustment includes elimination of intersegment transactions of 664 million yen and corporate expenses of minus 18,294 million yen. From the three months ended June 30, 2011, the Group has revised its method of performance management regarding headquarter division-related expenses; and among such headquarter division-related expenses, research and development expenses and a portion of expenses relating to the provision of services, which had previously been allocated to each segment, have been accounted for as corporate expenses. The impact of this change on segment income has been 6,306 million yen in the Precision Equipment Business, 10,103 million yen in the Imaging Products Business, 1,314 million yen in the Instruments Business, and 570 million yen in Other Business. The net sales of each segment and the net sales and operating income under corporate have not been impacted by this change. Segment assets adjustment includes coorporate assets not allocated to the respective reportable segments of 268,272 million yen and elimination of intersegment transactions of minus 20,043 million yen. The group also revised its method of cooperate assets management with the revision of performance management method regarding headquarter division-related expenses. The impact of this change on segment assets has been minus 13,601 million yen in the Precision Equipment Business, minus 16,261 million yen in the Imaging Products Business, munis 1,073 million yen in the Instruments Business, and 5,436 million yen in Other Business. Impact of this change on depreciation and amortization has been minus 1,515 million yen, minus 3,321 million yen, minus 186 million yen, and 2,125 million yen in the Precision Equipment Business, the Imaging Products Business, the Instruments Business and Other Business, respectively. The impact of this change on increase in tangible/intangible fixed assets has been minus 2,678 million yen in the Precision Equipment Business, minus 8,026 million yen in the Imaging Products Business, minus 577 million yen in the Instruments Business, and 6,351 million yen in Other Business.
3. Segment income is adjusted with reported operating income on the consolidated financial statements.
― 24 ―
[Related Information]
Fiscal year ended March 31, 2011 (From April 1 2010 to March 31, 2011)
1. Information by geographical area
(1) Net Sales (Million yen)
Japan USA Europe China Other Total
127,162 237,611 202,854 96,956 222,927 887,512
(Note) Sales information is based on the geographical location of customers, and it is classified by region.
(2) Property, plant and equipment (Million yen)
Japan North America Europe Asia/Oceania Total
91,084 5,053 3,619 19,258 119,016
Fiscal year ended March 31, 2012 (From April 1 2011 to March 31, 2012)
1. Information by geographical area
(1) Net Sales (Million yen)
Japan USA Europe China Other Total
130,517 221,768 225,739 126,302 214,325 918,651
(Note) Sales information is based on the geographical location of customers, and it is classified by region.
(2) Property, plant and equipment (Million yen)
Japan North America Europe China Other Total
95,509 5,160 3,334 13,929 13,009 130,943
― 25 ―
[Information for amortization of goodwill and balance of goodwill by business segments reported] Fiscal year ended March 31, 2011 (From April 1 2010 to March 31, 2011)
(Million yen)
Precision Equipment
Imaging Products
Instruments Total Other
Corporate or Eliminations
Total
Amortization of goodwill for the current fiscal year
- - 1,581 1,581 - - 1,581
Balance of goodwill at fiscal year ended March 31, 2011
- - 13,235 13,235 - - 13,235
Fiscal year ended March 31, 2012 (From April 1 2011 to March 31, 2012)
(Million yen)
Precision Equipment
Imaging Products
Instruments Total Other
Corporate or Eliminations
Total
Amortization of goodwill for the current fiscal year
- - 1,581 1,581 - - 1,581
Impairment loss for the current fiscal year
- - 6,497 6,497 - - 6,497
Balance of goodwill at fiscal year ended March 31, 2012
- - 5,157 5,157 - - 5,157
3)Per-Share Information
Fiscal Year Ended March 2011 (From April 1, 2010 to March 31, 2011)
Fiscal Year Ended March 2012 (From April 1, 2011 to March 31, 2012)
(Yen) (Yen) Net assets per share 980.62 Net assets per share 1,091.98
Net income per share 68.90 Net income per share 149.57 Net income per share(fully diluted) 68.83 Net income per share(fully diluted) 149.41
(Note) The basis for calculating net income per share and fully diluted net income par share is shown below. Fiscal Year Ended
March 2011 (From April 1, 2010 to March 31, 2011)
Fiscal Year Ended March 2012
(From April 1, 2011 to March 31, 2012)
Net income per share Net income (loss) (million yen) 27,312 59,305 Amount not belonging to common stockholders (million yen)
- -
Net income (loss) related to common stock (million yen)
27,312 59,305
Average shared outstanding (1,000 shares) 396,434 396,502 Net income per share (fully diluted)
Increase in common stock (1,000 shares) 355 439 (Subscription rights to shares) (1,000 shares) (355) (439)
Latent shares not included in fully diluted net income per share calculation due to lack of dilution effect.
2007 stock options (99 new share subscription rights): 99,000 shares of common stock
2007 stock options (99 new share subscription rights): 99,000 shares of common stock
4) Significant subsequent events
Not applicable
― 26 ―
5. Non-Consolidated Financial Statements
(1) Non-Consolidated Balance Sheets
(Million yen)
As of March 31, 2011 As of March 31, 2012
Assets
Current assets
Cash and deposits 120,006 71,378
Notes receivable-trade 12,147 6,249
Accounts receivable-trade 73,095 89,904
Merchandise and finished goods 41,662 53,204
Work in process 97,098 96,084
Raw materials and supplies 12,430 13,589
Deferred tax assets 34,222 35,628
Short-term loans receivable from subsidiaries and affiliates 19,231 29,145
Accounts receivable-other 10,925 18,093
Other 1,083 2,240
Allowance for doubtful accounts (240) (214)
Total current assets 421,662 415,305
Noncurrent assets
Property, plant and equipment
Buildings, net 21,365 19,960
Structures, net 941 879
Machinery and equipment, net 23,263 22,383
Vehicles, net 136 140
Tools, furniture and fixtures, net 6,176 5,792
Land 9,872 9,872
Lease assets, net 4,544 3,885
Construction in progress 5,716 13,673
Total property, plant and equipment 72,016 76,588
Intangible assets
Patent right 6,461 6,680
Leasehold right 4 4
Right of trademark 27 21
Software 16,742 18,162
Lease assets 2 0
Other 94 89
Total intangible assets 23,332 24,958
Investments and other assets
Investment securities 46,747 44,866
Stocks of subsidiaries and affiliates 47,468 47,583
Investments in capital 2 1
Investments in capital of subsidiaries and affiliates 13,631 14,918
Long-term loans receivable from subsidiariesand affiliates 10,772 11,870
Long-term loans receivable from employees 14 10
Long-term prepaid expenses 258 645
Prepaid pension cost - 8,852
Deferred tax assets 17,141 14,307
Other 2,721 2,702
Allowance for doubtful accounts (9) (9)
Total investments and other assets 138,748 145,751
Total noncurrent assets 234,097 247,298
Total assets 655,760 662,603
― 27 ―
(Million yen)
As of March 31, 2011 As of March 31, 2012
Liabilities
Current liabilities
Notes payable-trade 1,012 917
Accounts payable-trade 137,536 118,506
Short-term loans payable 13,600 13,600
Current portion of long-term loans payable 1,760 4,700
Lease obligations 1,845 1,733
Accounts payable-facilities 8,719 20,803
Accrued expenses 25,347 25,261
Income taxes payable 530 14,977
Advances received 45,472 40,089
Deposits received 30,938 29,926
Provision for product warranties 3,975 3,619
Other 2,503 4,087
Total current liabilities 273,240 278,223
Noncurrent liabilities
Bonds payable 40,000 40,000
Long-term loans payable 24,700 22,900
Lease obligations 2,824 2,269
Provision for retirement benefits 10,756 -
Provision for directors' retirement benefits 606 -
Suspense receipt by land expropriation 10,490 10,490
Asset retirement obligations 1,399 1,423
Other 724 1,301
Total noncurrent liabilities 91,500 78,384
Total liabilities 364,741 356,608
Net assets
Shareholders' equity
Capital stock 65,475 65,475
Capital surplus
Legal capital surplus 80,711 80,711
Total capital surplus 80,711 80,711
Retained earnings
Legal retained earnings 5,565 5,565
Other retained earnings
Reserve for special depreciation 28 22
Reserve for research and development 2,056 2,056
Reserve for reduction entry of replaced property 5,131 5,072
Reserve for reduction entry - 18
General reserve 111,211 111,211
Retained earnings brought forward 29,866 46,828
Total retained earnings 153,858 170,774
Treasury stock (13,173) (12,992)
Total shareholders' equity 286,872 303,969
Valuation and translation adjustments
Valuation difference on available-for-sale securities 4,446 3,047
Deferred gains or losses on hedges (727) (1,626)
Total valuation and translation adjustments 3,718 1,421
Subscription rights to shares 427 604
Total net assets 291,018 305,995
Total liabilities and net assets 655,760 662,603
― 28 ―
(2) Non-Consolidated Statements of Income
(Million yen)
Year ended March 31,2011 Year ended March 31,2012
Net sales 677,661 688,781
Cost of sales 544,353 527,234
Gross profit 133,307 161,547
Selling, general and administrative expenses 117,917 127,835
Operating income 15,390 33,712
Non-operating income
Interest income 419 525
Dividends income 7,132 8,224
Rent income on noncurrent assets 2,938 2,890
Royalty income 712 615
Foreign exchange gains 2,928 3,942
Other 1,522 2,800
Total non-operating income 15,653 18,999
Non-operating expenses
Interest expenses 519 474
Interest on bonds 336 538
Rent expenses on noncurrent assets 3,011 2,590
Other 1,872 532
Total non-operating expenses 5,739 4,136
Ordinary income 25,303 48,575
Extraordinary income
Gain on sales of noncurrent assets 26 65
Gain on sales of investment securities 30 44
Total extraordinary income 56 109
Extraordinary loss
Loss on retirement of noncurrent assets 831 182
Loss on sales of noncurrent assets 5 0
Impairment loss 322 4
Loss on sales of investment securities 82 95
Loss on valuation of investment securities 4,512 -
Loss on adjustment for changes of accounting standard for asset retirement obligations
592 -
Loss on disaster 1,040 2,787
Total extraordinary losses 7,387 3,070
Income before income taxes 17,973 45,614
Income taxes-current (1,310) 13,815
Income taxes-deferred 6,404 2,481
Total income taxes 5,094 16,296
Net income 12,879 29,318
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